Managing the earnings allocation for partners is fundamental to running an effective professional services firm, regardless of whether it is organized as a partnership or another type of ownership structure. There is often a direct economic link between how much partners bring into the firm via revenue and profit and how much they receive as their share of the profit. Despite this direct link, partner earnings allocation decisions can be complex.
In 1983, David Maister examined many important aspects of professional services firm management in his book, Managing the Professional Service Firm. One chapter is dedicated to partner earnings, where Maister specifically opines on how firms differentiate these earnings based on a variety of factors.
Forty years after Maister’s original research, WTW has explored changes in partner earnings philosophies in a very different operating environment. WTW would like to thank David Maister for granting his permission to leverage and build on his original research.
Eight partner archetypes were defined in both Maister’s and WTW’s studies to examine the degree of earnings differentiation (Table 1).
| Partner archetype | Description |
|---|---|
| Average partner | The typical partner |
| Rising young superstar | Young and entrepreneurial; has built a loyal following of associates |
| Unproductive older partner | May have run out of gas; suspect personal problems at home |
| Individualistic solo operator | Likes handling high visibility projects and cases; may be slightly glib |
| Partner associate | Less effective in developing business; relies on other partners for opportunities |
| Executive committee member | Tries to do everything; major force in the firm |
| Struggling office leader | Manages branch office that has poor profitability |
| Major rainmaker | Passes clients and work on for others to handle |
Per David Maister’s 1983 book, Managing the Professional Service Firm.
In his original work, Maister noted that the range of responses varied significantly. Today, 40 years later, the range is even larger for five of the seven partner archetypes. This points to the importance of doing what is right for your firm, its history, culture and circumstances, yet serves as a reminder to be mindful of practices that exist elsewhere. In part, this awareness helps attract talent from other firms and defends against partners being targeted by firms with more attractive pay propositions.
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